Perma-Fix Environmental Services(US:PESI)2025-11-10 19:08Revenue and Profitability - Revenue for Q3 2025 increased by $642,000 or 3.8% to $17,454,000 compared to Q3 2024, driven by a 44.7% increase in the Treatment Segment revenue [101]. - Gross profit for the nine months ended September 30, 2025, was $4,761,000, reflecting an increase of $5,353,000 or 904.2% compared to a gross loss of $592,000 in the same period of 2024 [102]. - Consolidated revenues increased by $642,000 or 3.8% for the three months ended September 30, 2025, compared to the same period in 2024, totaling $17,454,000 [110]. - Gross profit for the quarter ended September 30, 2025, increased by $1,223,000, totaling $2,557,000, with Treatment Segment gross profit increasing by $1,856,000 or 452.7% [116]. - For the nine months ended September 30, 2025, consolidated revenues increased by $1,544,000 or 3.5%, totaling $45,959,000 [112]. Segment Performance - Treatment Segment backlog reached approximately $15,396,000 as of September 30, 2025, an increase of $7,537,000 or 95.9% from December 31, 2024 [105]. - The Treatment Segment revenue for Q3 2025 was $13,114,000, up $4,050,000 or approximately 44.7% from Q3 2024 [101]. - Services Segment revenue decreased by $3,408,000 or 44.0% to $4,340,000 for Q3 2025, attributed to delays in project mobilizations and awards [101]. - International initiatives contributed approximately $798,000 or 310.5% increase in revenue from international customers in the Treatment Segment [111]. - Services Segment gross profit decreased by $633,000 or approximately 68.5%, with gross margin declining to 6.7% from 11.9% [116]. Expenses and Costs - SG&A expenses increased by $1,597,000 or 15.0% for the nine months ended September 30, 2025, compared to the same period in 2024 [102]. - SG&A expenses increased by $451,000 for the three months ended September 30, 2025, totaling $4,083,000, primarily due to higher salaries and payroll-related expenses [118]. - Cost of goods sold decreased by $581,000 for the quarter ended September 30, 2025, totaling $14,897,000, with Treatment Segment costs increasing by approximately $2,194,000 or 25.4% [114]. - SG&A expenses increased by $1,597,000 to $12,228,000 for the nine months ended September 30, 2025, representing 26.6% of revenue compared to 23.9% in 2024 [119]. Cash Flow and Liquidity - Cash used in operating activities of continuing operations was $(8,312,000) for the nine months ended September 30, 2025, compared to $(10,971,000) in 2024 [127]. - The company had working capital of $18,393,000 as of September 30, 2025, down from $28,283,000 as of December 31, 2024 [131]. - Cash used in investing activities of continuing operations totaled approximately $(2,683,000) for the nine months ended September 30, 2025 [127]. - As of September 30, 2025, the company had liquidity of approximately $23,844,000 and no outstanding borrowing under its Revolving Credit [125]. Future Outlook and Risks - The company expects revenue from the West Valley Development Project to ramp up in 2026 as the scope is further defined and approved [105]. - The federal government shutdown may impact operations, but the company believes its backlog and increased international receipts may mitigate the effects [106]. - The company is subject to significant uncertainties due to macroeconomic conditions, including government budget issues and trade uncertainties, which may impact revenue and profitability [151]. - The company is currently facing potential delays in waste shipments due to a partial government shutdown, which may impact operations and liquidity [150]. Research and Development - Research and development expenditures for the nine months ended September 30, 2025, were $1,037,000, up from $872,000 in the same period of 2024 [102]. - The company has filed patent applications for its PFAS destruction technology, which is expected to complement its core waste remediation services [152]. - The second-generation Perma-FAS system is anticipated to triple production capacity and is expected to be deployed in Q1 2026 [153]. Environmental and Regulatory - The company has accrued environmental remediation liabilities of $764,000 as of September 30, 2025, a decrease of $3,000 from the previous balance [156]. - Approximately $11,666,000 or 66.8% of total revenues for the three months ended September 30, 2025, were generated from federal government contracts, compared to $11,749,000 or 69.9% for the same period in 2024 [149]. - The Facility Fee has been revised from 0.375% to 0.500%, reverting back to 0.375% once the FCCR requirement is met [143]. Labor and Compensation - The Collective Bargaining Agreement (CBA) provides for annual base hourly wage increases of 1% plus the annual percentage change in the Consumer Price Index for Covered Employees [147]. - Administrative SG&A expenses rose primarily due to higher salaries and payroll-related expenses totaling approximately $352,000, influenced by the hiring of a COO and cost-of-living adjustments [120]. Interest and Tax - Interest income decreased by approximately $26,000 for Q3 2025 but increased by approximately $222,000 for the nine months ended September 30, 2025, compared to the same period in 2024 [121]. - Income tax expenses were $0 for Q3 2025 and $4,300,000 for the nine months ended September 30, 2024, resulting in effective tax rates of 0% and 36.6%, respectively [123].